Wattenberg-focused Synergy Resources Corp. (NYSE: SYRG) said Oct. 30 that it has struck a deal to buy multiple wells and acreage rights to 4,053 net acres in the Codell and Niobrara formations for $125 million.

In addition to vertical wells, the deal includes nonoperated working interests, ranging from 6-40%, in 17 horizontal wells. Ten wells are in production and seven are two-mile extended reach laterals that are expected to begin production by year’s end. Synergy also gains 73 operated and 11 nonoperated vertical wells.

Synergy, of Platteville, Colo., said the seller was a private party.

The deal will be paid with $87.5 million in cash from borrowing and $37.5 million in stock, much like other deals the company has done, Irene O. Haas, analyst, Wunderlich Securities, said in a report.

At $65,000 per flowing barrel—the current Wattenberg average—the acquisition’s production of 1,430 barrels of oil equivalent per day (boe/d) has a value of about $93 million.

“The implied land price is $32 million or $7,908/acre counting just the Codell and Niobrara acreage,” Haas said. “The company also secured an incremental 1,739 net acres with rights to the Sussex, Shannon and J-Sand.”

William Scaff, co-CEO of Synergy Resources, said the deal expands the company’s producing assets and leasehold area of operations in the Wattenberg core by 20% to more than 35,000 net acres.

“These assets are in the southern portion of the Wattenberg Field in the townships near our Phelps and Eberle horizontal wells where we have had excellent results,” Scaff said. “The leasehold is all HBP and allows us to commit capital to further develop the properties at such time and manner that we feel will be most advantageous to Synergy and its shareholders.”

All of the company's production to date comes from wells in the Wattenberg Field in the Denver-Julesburg Basin. Synergy operates 314 wells, 156 of which have been drilled by Synergy since 2009.

Scaff said the company has entered into a financing agreement with SunTrust Robinson Humphrey Inc., as the lead arranger, and SunTrust Bank, as the administrative agent, for a $230 million borrowing base on a $500 million senior secured revolving credit facility.

Haas said her preliminary estimates show that the deal is likely to be accretive to cash flow and earnings per share in 2015. The company ended fiscal year 2014 with a debt-to-cap ratio of 12% and debt of $37 million. That gives it plenty of room to borrow and will still end up with a lean balance sheet.

“SYRG is an exceptionally well-run, small-cap company with low debt and high growth,” she said. “In addition to the Wattenberg core [with 35,000 net acres], the company is pursuing the Green Horn interval in the northeast extension of the field [25,765, net acres]. Also, the Nebraska Pennsylvanian play [with 182,600 net acres] could potentially add a third core area. We continue to recommend SYRG as we believe its valuation is very attractive considering its triple-digit production and reserves growth rates.”